The gold price received support from not only the debt ceiling uncertainty, but also from TD Securities, which raised its price forecasts

The gold price spiked to anther all-time high, touching $1,626 per ounce Wednesday morning. The price of gold advanced following the news that durable goods orders unexpectedly fell 2.1% in June – versus expectations of a gain of 0.3%. Worries that a more severe drop in consumer spending is forthcoming weighed on stock and commodity markets. Crude oil fell 1.1% to $98.47 per barrel and copper sank 0.8% to $4.44 per pound. Silver followed the gold price higher, rising to $41.07 per ounce.

The gold price received support from not only the debt ceiling uncertainty on Tuesday, but also from TD Securities, which raised its price forecasts on the gold. The firm increased its gold price target to $1,512 from $1,400 per ounce in 2011 and to $1,700 from $1,400 in 2012.

In TD Securities’ report, analyst Greg Barnes wrote that “The higher gold price reflects our view that gold should benefit from the uncertainties facing the global economy and a continued trend by investors to seek way to insulate their portfolios against these ongoing risks.”

Barnes went on to say that “Economic conditions in the U.S. appear to be softening…Expectations of Fed tightening continue to be pushed back…given the economic backdrop, further easing by the Fed (QE3) would not be out of the question.”

Alongside the possibility of QE3, TD Securities cited several other “significant macro risks overhanging the global economy that should provide continued investment demand for gold, including: the potential for a double dip recession, risk of sovereign debt defaults, questions surrounding the future of the Euro, uncertainty regarding the long term status of the U.S. dollar as the world’s reserve currency, the sheer size of monetary stimulus that remains to be unwound, and developing world inflationary pressures.”

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also wai...
Read more

For the gold price, two outcomes are possible.

Image
For the gold price, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June and December lows were not a double bottom and one further drop may come. I account that the least likely, and look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?   You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad ...
Read more

The price of gold advanced as high as $1,603.40 per ounc

Image
The gold price broke out to a new all-time high above $1,600 per ounce Monday morning, rising for the eleventh consecutive trading session. The price of gold advanced as high as $1,603.40 per ounce before backing off to trade just the $1,600 level. The yellow metal gained on the back of a surge in borrowing costs for Italy, the latest European nation to see its bond market come under heavy selling pressure. The lack of a deal to raise the $14.3 trillion debt ceiling also helped boost gold prices. The eleven-day rise in the gold price is the longest winning streak since January of 1980. The gold price delivered another noteworthy performance last week, climbing 3.2% on its way to a series of fresh record highs. With Monday’s advance, the gold price extended its monthly and year-to-date gains to 6.6% and 12.5%, respectively. Last week’s two-day Congressional testimony by Chairman Ben Bernanke on the economy and monetary policy revealed that the Fed remains open to the...
Read more